Monday, July 04, 2005

There are some excellent follow-up comments in my post about how Microsoft's current review stack ranking system seems completely busted and unfair. While I truly believe there are solutions to it, the solutions will neither be easy nor readily agreed upon. But our system is busted and we have to walk away from trending great performances downward, demotivating our employees, and giving people a reason to keep around their poor performers to ensure the bottom of the curve is always easily occupied.

A few questions considering the comments and the current review season joy:

What do employees want and need in order for them to provide fantastic customer-pleasing results?

We have a bunch of stinker leads still. How do we identify them? What do we do with them?

What can the stack ranking system be replaced with?

The Washington Post recent had an article called "The Mark of a Good Manager." What makes a good manager? One that empowers and trusts their employees with meaningful work and a manager that is available for engaged conversation and is respectful of questions (a challenge for Microsoft). I have a great lead now, but I've had some leads who perfected the, "Huh? What the hell do you want?" gaze when I dropped by their office to clarify an implementation detail.

What the hell do I want? To get you to do your job.

Folks know that managers get a separate people review rating in addition to their individual rating. I haven't seen this given a whole lot of attention. A problem with the review rating is that it's still something negotiated by the lead and their management. Shouldn't the reports (from the very bottom of the hierarchy) have some kind of say? Folks might actually fill out the manager feedback if they knew there was a spot to rate their boss and have it stick. Sure, there might be some sycophantic and burning revenge bits in there but out of this noise would be the stars and the clunkers. Love your stars, get rid of your clunkers.

First, I'd want to fire the bad managers. But as a compromise, I'd look back at their individual contributions and if they were happy and productive good employees, I'd give them that chance to side-step back into an individual contributor world. Make this part of an effort to flatten management all-around and get more talented contributors back spec'ing, developing, testing, and all that other work. Decide that managers are going to plain just manage, and manage super-well.

Back to the stack ranking system. I was in Borders at RedmondTownCenter and I stumbled across Joel Spolsky's new book The Best Software Writing I (which was sheer luck - I had seen it before but mistaken the current cover for the previous book's cover). I flipped through it and by sheer luck compounded hit the article by Mary Poppendieck put in the section called "Team Compensation." (it can be found off of Ms. Poppendieck's site as well: http://www.poppendieck.com/pdfs/Compensation.pdf). I read the article a little and decide to plunk down some cash for the book (I'm quite glad I did) and sat down in Starbucks and continued reading.

The article deals with the classical story of a team that did a fantastic job all around but now the manager is faced with stack ranking her employees. She says they all are the best (4.0) and has to deal with the consequences. I certainly recognized the listing of dysfunctional consequences that result from the competitive stack rank system:

Competition.

The perception of unfairness.

The perception of impossibility.

Suboptimization.

Destroying intrinsic motivation.

Something I didn't realize is that good ole Deming himself decried ranking review systems and I thank the article for bringing that up. Back when I was a Deming-nerd I didn't work for a stank-ranking organization so that particular key point was lost of me. The Deming article Gone But Not Forgotten has the following succinct gem:

Remove barriers that rob people of joy in their work. This will mean abolishing the annual rating or merit system that ranks people and creates competition and conflict.

I'd like to hear from the Microsoft executive who thinks they have greater insights into team leadership than Deming.

Our current review system lacks honesty and integrity when you have to fit people to a curve and then tailor your feedback according to where they ended up. You're lying to them about their accomplishments so that they can be fitted into a compensation model. You can't give them truly honest feedback during the rest of the year because the end-result-curve may not match your kudos.

The only feedback I see mandated to give people during the year? Give them feedback and "message" them if they are at risk of getting a 3.0 so that it's not a surprise. We spend more time preparing the soft-landing for bad-news that folks who are doing great don't get to hear it.

We have to grow up and come up with a review system that encourages truth, encourages recognition, and encourages people to be their best without having to kick their peer in the shin ("I don't have to run fast - I just have to run faster than you!"). And don't get trapped in the mindthink that truthful feedback is tightly coupled with compensation.

I've been reading the other post and comments with interest. I'm a csg who's been asked to interview for a couple of positions, which I'm not against. I've got a comparable offer from another company, though, so I'm thinking why bother? Now I know: don't. I can't imagine going through this inanity year after year. The ranking sounds like it produces the same results that would have happened anyway, but with more rancor (especially arguing over who accomplished what). The co-workers I've had have been pretty much average for the industry (some great, some ditzes), so why do I want to bother with a place that encourages people to think overly highly of themselves and to make the blame game even more necessary than elsewhere? I don't.

I was mostly leaning the other way anyway, but reading all this really makes it much easier. This is most clearly crap I don't want part of my life. Thanks!

Thanks for this eye-opening discussion of stack-ranking (aka "calibration").

The knee-jerk response will be to say that it's only the 3.0's who are complaining about this system. But that's exactly the point: the stack-rank approach has demotivated a lot of good employees whose main failing is the naive thought that being in a supporting role on a strong team is still a good thing...

I spent years on a very strong team working my ass off for 3.5's and the occassional 4.0. It was very frustrating to see mediocre people on other teams sky rocket simply because they were surrounded by idiots. My choices at Microsoft were A) stay on a strong team and be content with slow career growth, B) join a team of dimwits, or C) leave the company.

Well, first of all, the point of stack ranking is to reward the best performers the most. If you don't rank people, you don't know who is "best."

Perhaps rewarding the best performers more than the next-best is the wrong thing to do. But if it isn't, then you still need the stack rank.

That doesn't mean it can't be done better. Like any system, it's only as good as the people implementing it, and it's clear we have our share of under-performing managers.

So yeah, we should make a much greater effort to weed out bad management. Regardless of whether we have stack rankings or not, getting rid of bad managers is a good idea.

We also need to reward strong performing groups better as a whole than their weaker performing siblings. Flowing more rewards to groups that hit their schedules, avoid churning other teams (I'm talking to you, Windows Setup), and in general produce reliable contributions is really important.

Both of those things can be done with or without changing the stack rank system. And frankly, changing the stack rank system without doing both of those things probably won't help much anyway.

If you think things are bad in the Microsoft core, ask some of the employees recently gained by acquisition how they are handling it.

Take an agile, innovative small company where entire teams are made up of nothing but high performers who have been accustom to being recognized and rewarded by means and amounts appropriate to their situation. Maybe they even had profit sharing or royalties. They put out great products that attracted the attention of Microsoft, which decided that it would be easier to purchase them than compete with them.

Now the company has been acquired, leaving its owner(s) well compensated, and its employees being indoctrinated in the Microsoft way. Leaving out other adjustment issues such as computers that only run half as fast as they used to once attached to corpnet, the review and compensation system tends to come as a shock as they discover how things actually work. For some reason the HR reps that do the new employee orientations don't mention things like curve requirements or stack rankings, but hey, it's not like they'll ever find out.

But after the initial year or two post-acquisition, they wise up and learn the ways of the game. People who never bothered much with politics or self-promotion because they were too busy getting the job done, learn that whose arse they suck up to, and how much they beat their own chest matter a whole lot more than doing a thankless job well. Bell curves don't scale down to small groups very well, especially when all the children were above average to start with (since deadweight couldn't survive so easily pre-acquisition).

Now that they realize that their old compensation model is gone, and that 2/3rds or more of them are looking at losing ground to real inflation each year, no matter how good (or badly) their products do, moral and motivation soars... straight into the ground. Carefully nurtured work environments rot away as competition shifts from that other company in Silicon Valley and the products it puts out, to the guy next to them.

Bungie, as one of many, would make a good example. It’s not just because of the higher demands of Xbox 360 that Halo 3 is going to take more people and time than pervious installments. They’re losing motivated people. Some are gone and others are jaded. Doesn’t matter how many hundreds of millions Halo makes or how many Xbox’s it sells, they’ll get the same curve and merit budget as other studios that have yet to produce anything.

One justification for stack ranking used to be that it is better to get rid of the lowest performers and replace them with eager new-hires. The idea was that the perpetual 3.0 had probably gone as far as he's going to go in the company, but the new-hire's potential was unknown and therefore unlimited.

Problem is, the labor market has changed, MS is no longer attracting the best of the best, and anyway, for many groups it's been a long time since they've been allowed to recruit externally...

Employees rating managers is a good idea but no panacea. I worked at a school where we let the students rate the professors. We found a tight correlation between ratings and grades; those with poor grades gave low marks to the professors and vice versa. Not too fair that way either!

It's an interesting cultural phenomenon that has been evolving in the US over the past 20 years: consider that the group of employees that is coming through the ranks (not only at MSFT) that hates these 3.0s and a forced distribution system is pretty much the same group that was able to achieve 4.5 GPAs in college -- when 4.0 used to be the max. These folks were born and raised in a world of grade inflation and self-esteem training, told by their parents that everything they did was fantastic. I can see where as adults it would be difficult to stomach a forced distribution system that prevents such inflation and tells the bottom folks that they need to step up, stop blogging, and ship better software. :)

On a very strong team, I can see how the stack rank would be limiting/demotivating. But much of that appears to be because a 3.0/acceptable isn't really acceptable since repeated 3.0's will end your career. Not sure how you fix it since virtually every company has the concept of a stack rank albeit that it may not be as explicit. A start would obviously be to ensure that if 3.0 is rated "acceptable" then it really is acceptable. Additionally, having various seniority curves for each position such that an employees can earn higher bonuses by moving through these even if they still score a 3.0 would also be useful (and perhaps exists?). As a former employee who was continously ranked 4.0 and above, I can tell you that my reasons for leaving had little to do with the stack rank. Indeed, a much bigger concern was the many inexperienced managers who mostly because of longevity, were in positions far beyond their ability. Worse, as new more experienced people came in, these folks felt threatened and often gravitated to their weaker reports with whom they often had history and who made them feel relevant. As a result, you ended up with the totally whacked sitution whereby the mgr and the 3.0's formed a clique and the 4.0's were told to slow down in order to make the latter group feel like they were contributing. However, above and beyond this, my major concern was the total disconnect between internal rankings and external performance. Not an issue for developers per se, but in the field, it was commonplace for someone who rarely if ever saw a customer (despite having that responsibility) to be ranked at 3.5 or better because they devoted all the time they saved to playing internal politics - which were rampant(and seemingly still are).

I agree that the system is badly broken. It pissed me off so much it was one of the main reasons I left Microsoft.

Wanted to change subjects a bit and post this cnet article about hiring at Microsoft. Lots of good grist in the mill for you there. One thing I found interesting though is the charts of revenue and headcount over the years. Analysing the data, one sees that although the headcount rose from 20561 in 1996 to 57086 in 2004, the revenue over the same period rose from $9.1B to $36.8B. What that means is that revenue per employee at Microsoft also rose, from $443K in 1996 to $645K in 2004. Maybe having so many employees isn't so bad after all...

"What that means is that revenue per employee at Microsoft also rose, from $443K in 1996 to $645K in 2004. Maybe having so many employees isn't so bad after all..."

A pretty weak argument since undoubtedly over a large period of that time revenue would have risen regardless of headcount as MSFT became the defacto infrastructure standard. Moving to recent history and earnings - which ultimately is what it's all about - MSFT is barely making more today than in 00 despite 50% more employees and 50% higher revenue. That's a pretty piss poor result.

I don't know what I'm talking about 90% of the time... especially when it comes to Microsoft. I know that everyone around me is way smarter than me and I do believe I may be "P.U.R.E." a Previously Undiscovered Recruiting Error. I LOVE MICROSOFT... that having been said I'm pretty sure I'm the dead wood that you want the company to get rid of.

Perhaps that’s good... most of the time I rave that you are right... I don't honestly know... I just know that I work tirelessly to do what is right for the company.

I faced an interesting quandary as 99% of the time I side with your blog. I came across this in business 2.0 the July edition page 72… it set me back on the bloggers. It is taken from the “Bill Swanson’s CEO Handbook Secrets” that was discussed in the article.

Before I quote this, I think that dissension is vital… I’m the black sheep of my family, my team and perhaps my company… but I’m proud of my family and my family name… so I have to pose the same question to you:

“Treat the name of your company as if it were your own. -- My father always said, ‘You were given a good name when you came into this world; return it the way you got it.’ A company’s reputation is built on the actions of each employee. I spend a lot of time emphasizing ethics and integrity, but I humanize those issues by asking people to treat the Raytheon name the same way they do their family name. Anyone who would bring embarrassment to our name should find work somewhere else.”

Should you find work somewhere else? I don’t think so. Should you find a way to voice your concerns within the confines of the “family?” I would hope so.

I know your intelligence, power and writing ability far outweigh mine, but your outlet and means are not doing much good to your cause. If you really want to improve Microsoft I would encourage you to find a more constructive outlet for your voice. Blogs are like 1995 home pages of HTML… cool for a while, but at some point people realize they are nothing more than a cork board next to a refrigerator, water cooler and a microwave… in the free soda room… that nobody really cares about after the first week/year they put it up. Don’t loose your voice when the blog phase is over.

Put your passion and drive into change… not just descent. We NEED you now more than ever.

Re the rest, why do so many emps apparently care more about shutting Mini up than in fixing the sources of his concern?

Because at anything above the lead level, they don't believe there are any serious problems. Just take a look at postings by managers here and elsewhere (there were some great ones on 'sophist a while back). It's always easier to point your fingers at the guy who isn't wearing the 24x7 happy face.

"Because at anything above the lead level, they don't believe there are any serious problems"

Oh they probably know better than anyone that there are major problems. Doesn't take a genius to figure out that a 2% total return on your stock in 3 years represents a serious vote of non-confidence. Or that running 2 yrs late on your flagship OS and having to cut features left and right to even make that suggests a majorly fucked up process. The trouble appears to be that they're richly compensated in salary and options (which they regularly bail on) and are under little pressure for results. Therefore, they have no real incentive to rock the boat and risk getting kicked off the gravy train. They're probably also counting on the fact that when the day of reckoning comes - as it will - that they'll be high enough up the ladder for it to take years to get to them and by that time, the'll have socked away enough to retire and/or use their previous role to jump ship somewhere else. One thing I noticed about folks like these, as much as they might suck at their particular mandate, they generally excel at CYA and looking out for #1.

[Quote]“Treat the name of your company as if it were your own. -- My father always said, ‘You were given a good name when you came into this world; return it the way you got it.’ A company’s reputation is built on the actions of each employee. I spend a lot of time emphasizing ethics and integrity, but I humanize those issues by asking people to treat the Raytheon name the same way they do their family name. Anyone who would bring embarrassment to our name should find work somewhere else.” [Quote]

You make me want to throw up. It is a serious mistake to liken a company, especially a large one like Microsoft, to a family. The basic nature of the relationship(s) is far different.

Do you stack rank you children and spouse each year? Do you get rid of or "push out" the low performer(s) in your family? Do you allocate the benefits disproportionately to the highest performing members of your family? Do you tell warn your middle-ranking children that they had better improve or they are in danger?

More directly addressing Bill Swanson's quotes, the relationship between employee and employer is a two-way street, and in the past fifteen years or so the employment environment in the United States, and elsewhere, has changed more than most people have recognized. There once was an idealized relationship, which at its core rewarded employee loyalty with job security. That era is dead and gone.

If you think you have job security in a large company today, and it is not written into the severance section of your executive contract, then you are probably deluding yourself. We live in a time of at-will employment, and minimal to no commitment that there will always be a position for you, much less a career path and guarantee to not lose economic ground in your compensation. As individuals, we are told to be ready to adapt at a moment’s notice and consider ourselves as economic free agents. Do you know any Microsoft employees who plan to retire from Microsoft at 65? I know of none. Plenty want to retire once their economic goals are met through stock or other means, but they don’t see themselves in that classical career framework.

In an idealized or perfect setting, Microsoft would have the internal mechanisms to listen to and address the issues and concerns being voiced here, and act constructively upon them. And while we are at it, I want a pony. In my experience, the best Mini could hope for voicing his concerns internally is to have them completely ignored. More likely, they would come back to impact him negatively. This blog is in part because he cares deeply about Microsoft, not because he hates it. He is looking from the viewpoint of the employees outside of the executive suite; the ones tasked with the work creating the next generation of products, and wants the change to begin there.

Have you ever pondered the other end of the bell curve we use? By saying we only allow a small x percentage of 4.0 and up rankings, we are saying that we don’t want more than x exceptional employees. Almost every small tech company I have known wants as many exceptional employees as they can get, and would take x=100% if they could. I guess we are satisfied with far less, and that will allow us to stay the world’s best software company in the years ahead.

Very interesting discussion. I'm a manager at MS. Been at MS for the last 11 years, a manager for 3. Yes, the place has most certainly changed. There are a lot more nitwits around than when I first started, that's for sure. There's also a lot more bureaucracy that perpetuates those nitwits' existence.

The stack ranking process is a necessary evil in a company this large and slow. All the other suggestions for improving it are simply not fair on the scale of Microsoft.

That said, the one thing this company is just plain lousy at is getting rid of low performers. It's pathetic how much we "enable" these 3.0s with 36+ months in level to just hang around.

The one thing my track record as a manager shows is that I am not afraid to ditch the low performers. I've had frank discussions with folks where I've said, "This job isn't right for you, it's time for you to move on." And, they do...immediately.

The end result for me is that I have a very high performing team, with very high morale. Now, everyone understands what the review period at Microsoft is like and everyone understands that someone, somewhere is going to get shafted. HR probably doesn't like it, but I always tell my people the following: "You're on a very strong team, and we grade on a bell curve. Yeah, you got screwed. But, here's the deal. Everything you do here is a lead up to your next thing. This team is so strong and so capable that you will be given a variety of interesting and challenging things to do...things you would not get to do elsewhere in the company. Parlay the experience you gain here into your next gig. That may mean you stay for another year, that may mean you ask for permission to interview now, that may mean you're a lifer. It's your decision, but think of the long-term benefit to your career."

I've got folks who want to be GMs at MS, I've got folks who want to run their own company. I like to think that as a manager I've given them things to do now that will setup their career later. In the end, I view that as my role as both a coach and mentor.

Of course, in the end, we work for the money. And, Microsoft has been generous to us in terms of compensation, particularly given that other people I know work at places where they don't know if their paycheck is going to bounce or not. Yeah, the stock sucks, but who (besides Google and maybe Apple) in our industry has done well the last several years?

Microsoft has been good to me, in particular. But, for me, personally, I know that the company has changed beyond my ability and inclination to cope with the politics and backstabbing at my level and above. If you're a free-wheeling, independent thinker with a passion for building great businesses and teams, and just plain executing as quickly as possible with as much quality as possible...well, I don't know where at Microsoft you're best suited to work.

"Microsoft has been good to me, in particular. But, for me, personally, I know that the company has changed beyond my ability and inclination to cope with the politics and backstabbing at my level and above. If you're a free-wheeling, independent thinker with a passion for building great businesses and teams, and just plain executing as quickly as possible with as much quality as possible...well, I don't know where at Microsoft you're best suited to work."

Yikes, that's about the worst indictment of the company that you could possibly have come up with. Especially so given that your previous comments led me to believe that you're one of the minority of truly good mgrs. Once again, I find it interesting how rather than debate the truly strategic issues (i.e. Why is MSFT so slow? Why is it so political? Why is there so much backstabbing? Why is it so difficult to dump poor performers? Why isn't it a place where execution and quality go hand in hand? And the really big one - Where is the accountability for this and results generally at the senior most levels?) everyone seems to prefer talking about things like the stack rank system or whether expense cutbacks were warranted. Time to stop rearranging the deck chairs people and start focusing on why your snr mgt team is seemingly determined to continue this slow but inevitable implosion into the iceberg.

The stack rank isn't necessarily a bad tool, per se. Like all good tools, it should accomodate extra-ordinary situations, like the case of a team of star performers.

The biggest problem I see with Microsoft is not systemic in it's processes; the problem is with the people managers themselves. Sure there are some great people managers at Microsoft, but as a whole, the company simply does not value great people managers. It doesn't hire them, doesn't reward them, doesn't train them, and doesn't support them. Microsoft has historically hired really bright, self-motivated people and things basically got done without needing much people management. Things were good. (BTW, Google looks a lot like this right now; watch out).

SO now MSFT isn't the cool place for the bright, self-motivated people to work anymore, and in fact many of the older bright, self-motivated people are leaving. In this situation, it's imperative you have great people managers. And Microsoft doesn't. If they did, those managers would do the right thing in pretty much all cases where "the system" was screwing over their directs. But with mediocre (or worse) people managers, they just toe the corporate line and pass the shit downstream to their demoralized ICs.

It's funny; MSFT upper management has claimed that employees are the company's most important asset, but they haven't done anything to make sure that asset is happy, motivated, and properly rewarded by their work.

Mini, I really like your blog but I have to confess, you do a lot of whining. I think if we all work hard at it, we can push for positive changes within Microsoft. What we need is someone to show us how. I am pretty sure a lot of us one and two year employees already see things for what they are, at least within the Windows group.

This is a passion of mine, but I don't have the experience to do this as well as some of you five to ten years have. And it seems that just about every time I ask one of you who commiserate with me for advice, I simply get a burnt out's bitter retort.

You could take all that energy you're putting towards carefully keeping your anonymity while publically decrying our problems and channel it into something useful, like giving others in the company advice and using your own seniority to push positive changes within your group.

That is, unless it's going to put the kabosh on a book deal covering the iceberg we're headed towards.

"In this situation, it's imperative you have great people managers. And Microsoft doesn't. If they did, those managers would do the right thing in pretty much all cases where "the system" was screwing over their directs. But with mediocre (or worse) people managers, they just toe the corporate line and pass the shit downstream to their demoralized ICs."

Excuse me, but you obviously don't know how it works. The frontline manager isn't given the leeway to "do the right thing." If he submits a review model that doesn't fit the curve, it's adjusted by someone at a higher level who's only concerned about the numbers. If the frontline manager protests those adjustments, he gets a lecture on how "people management" includes identifying your lowest performers and giving them tough messages. The insinuation, sometimes stated explicitly, is that you're not a good manager if you refuse to do this. If you say that you have a strong team that doesn't deserve this treatment, you're told that you're not tough enough (I.e., you're a bad manager.)

The frontline manager is expected to own and deliver the result, even if he doesn't like it. He can't go into that review meeting and say something like " I wanted to give you a 3.5 but my boss knocked it down to a 3.0." (Well, he can, but it's not a good idea, for his employee's motivation or for his own career.)

People management skills aren't the same as the political skills needed to successfully buck a system like the stack-ranked, curved review model. I've known a lot of excellent people managers who didn't have the stomach or the know-how to win at office politics. They know how to motivate people and how to build great teams, but the system takes away many of the tools they ought to have, and often actively works against their attempts to motivate their employees.

There's a lot more going on here than just some mediocre people managers toeing the corporate line and passing the shit downstream.

I think I *do* know what's going on; I was a Lead PM before I left. Luckily my manager and I were 99% on the same page with the performance of my direct reports, so I never had to fight for a rating. But what you're saying is basically "do what you know is wrong for your employees because the people up the chain say so." There are other options: change the minds of thepeople up the chain, go against their desires, or get out of the game. I think the good people managers are choosing the 3rd option more and more. Who wants to fight a broken system?

"You could take all that energy you're putting towards carefully keeping your anonymity while publically decrying our problems and channel it into something useful, like giving others in the company advice and using your own seniority to push positive changes within your group."

He's created about the only major forum where these problems can be discussed candidly. WTF else do you want from the guy? You people who keep calling for him to either stfu and/or expose himself crack me up. What are YOU doing to make things better? What risks have YOU taken in that regard? If the answer to both is nothing then what's your EXCUSE for inaction? And don't hide behind that lack of seniority bs. Net net, concentrate on your own actions before telling Mini what else he should/shouldn't be doing.

"He's created about the only major forum where these problems can be discussed candidly."

No shit. I can't think of a more effective way to make improvements at MSFT than the approach that Mini has taken. Unless Mini reports to Bill or Steve, taking these issues up with his manager will lead to nothing. The ass-kissers telling him to shut up are the one's holding this company back.

I'm still not totally convinced that stack ranking is a miserable failure. I think it works fairly well, just as the SATs work fairly well. Not a perfect solution, but when you're dealing with such a large number of people . . . it works pretty well for most cases. There will always be outliers.

In any group, there will always be people who perform better then others. Given that you have X amount of compensation to distribute among your employees, you should be compensating your rock stars more then your mediocres.

If not, then your rock stars will realize that they might as well be mediocre too.

The argument that everyone in a strong team should get 4.0s is like everyone at MIT should get 5.0s and everyone at ITT Tech should get 3.0s.

It is totally a possible choice that if you don't like getting 3.0s, maybe you should be in another team. Also don't high yielding teams get a bigger X compensation to distribute?

If you're getting 3.0s while someone else is getting 4.0s, you should honestly ask, why am i not also getting 4.0s. If I honestly am not capable of doing better, I should stay and accept 3.0 or move to a less competitive league.

You're being too rational, but, as a fellow engineer, I gotta love you for it!

If you're getting 3.0s while someone else is getting 4.0s, you should honestly ask, why am i not also getting 4.0s.

You assume that the criteria for rewarding a 3.0 vs 4.0 is objective. It is not. Unfortunately, promotions, bonuses, and grant awards suffer the same malady. They're all highly dependent upon the effectiveness of your manager, the horse-trading of upper management, your group, your "visibility", market sentiment for your product, and probably a few other subjective things I'm not accounting for. A lot of people have serious issues with the rating system because it is often affected by political games that engineers are loathe to participate in (or, even worse, the rating may be influenced by whim, luck, or what your boss ate for lunch that day).

If I honestly am not capable of doing better, I should stay and accept 3.0 or move to a less competitive league.

But don't forget, repeated 3.0s leaves you on the street. The other point I'd bring up is that a 3.0 on Team A could be equivalent to a 4.0 on Team B - yet, management is trying to treat all 3.0s the same company-wide. If you happen to join a team of superstars and work hard but not excel, you could still lose your job while some slacker over on Team B kicks up his heels. EVEN if you are a net value-add to that group, you could lose your job. You can't force a homogenized model across a company with as many disparate groups as MS has.

I'm not arguing for inflated reviews here. I'm looking for a more intelligent system. I'd like to see more objective criteria put into place for determining rewards so that the subjective criteria has less of an effect. I'd like to see more local control in determining exactly who gets the rewards. I'd like to see few BIG bonuses and very little left over to split among the average. In fact, I'd prefer to see far fewer 4.0s and 3.5s in the model...but I'd also like to see 3.0 restored to what it is supposed to mean (i.e. "you did your job") without the negative baggage attached. I've seen us lose good, solid, unexceptional 9-to-5ers that provided me with support services that I needed and could rely on, and that's a damn shame. The cost to replace these people (especially those with history) is huge, but not something you see on the bottom line. Finally, I'd like to see more managers get serious about handing out 2.5s and pushing those employees out the door - not sending them to other teams. But you can't make up a formula for most of that, you have to trust your managers to do the right thing. It can't be automated...especially in something rife with ambiguitiy like software production.

I do think it is interesting that you are highly dependent on your manager to argue your case. It may be difficult with quieter or fresh managers.

I think this can often be soothed by having each individual person present their case to the manager, and then having the manager repackage the case his constituents have made to his manager attached with his comments. This has a nice side effect of putting some responsibility and giveing some understanding to the individual. I'm sure there are other benefits too.

I agree with you that a 3.0 should mean you did your job, and not that you will be fired. It should be you will not be promoted, and you did exactly what we paid you to do. . . but don't expect a bonus for doing your job. A manager once told me that bonuses are for what you did above what your salary was paying for. Not something you default to having for doing nothing.

Replacing people who are doing their job is highly expensive. You lose the experience that they have learned leaving you prone to repeating mistakes. You lose the time it takes to bring them up to speed and the time it took away from others to help them. There are other negatives on the list obviously.

I'm not a big fan of relying purely on an objective criteria, because often times weaker people use it as a crutch. Like you said there are "many disparate groups" but there are as well many disparate ways of effectively contributing. Objective criterias should always serve as a guideline, but anyone who isn't flexible to subjective problems is doomed to realize that not everything fits into the square hole.

I don't think we hired anyone based on how well they follow directions, but on how well they think and solve unique problems.

But I'm digressing. It seems that your problem with the ranking system is with doing just your job becoming a reason for losing it. I agree. If this is the case, then Microsoft is going to have a huge problem filling those empty seats. It seems that it is difficult these days to even find people who can get 3.0s.

I'm not a big fan of relying purely on an objective criteria, because often times weaker people use it as a crutch.

I agree with you here. I didn't mean to imply that only preapproved objective critera should be used. Managing is a messy, fuzzy business. Managers need to have power beyond that of a simple checklist to adhere to - no two situations on teams are the same. I'm just trying to find a way to mitigate some of the subjective part of the weightings (which, in my experience, have had a far larger influence).

I think more sanity could be brought to the process by introducing a 3.25 and 3.75 score levels.

I'm not so sure this would work well. In fact, I think it does just the opposite of what you want, it *adds* to the ambiguity. What is the difference between a 3.25 and a 3.5?

I'm leaning towards the exact opposite...reduce the review scores to 2.0 (PiP and out), 3.0 (you did good work), and 4.0 (you completely blew us away and went far beyond what was expected of you). 4.0 should be very rare. To get that 4.0 you really have to shine...it should be obvious to every member of the team that your contribution was phenominal. Then, reward the 4.0s big time. As you add more rating levels, it gets harder to put someone in a bucket without them getting ticked off - it's hard to argue where you placed an employee when the levels are too fine-grained, because the subjective starts to overwhelm the more objective criteria.

Ah well, here we are debating whether some marginal performer gets 1,000 grants/options or not. Meanwhile, Alchin, Raikes, Burgum and others are getting M's of same despite being chronically late in delivery, chronically bad at reenergizing the Office franchise or chronically bad at everything (respectively). Instead of focusing on steerage and whether some marginal performer who's contribution is highly unlikely to make a significant impact on MSFT's overall fortunes was treated fairly, why not focus on the bridge where the folks capable of strategically changing MSFT's fortunes are just flat out failing and worse, this pathetic performance that wouldn't garner a 2.5 on any objective scale, is being rewarded as if it's a virtuoso 5.0?

why not focus on the bridge where the folks capable of strategically changing MSFT's fortunes are just flat out failing and worse

Believe me, I understand your point. I, too, have a hard time seeing how the contributions of most VPs justify such lavish rewards. However, I know I have exactly -zero- influence on anything that high up the chain. The best I can do is try to do the right thing in my sphere of influence. The rest is up to the shareholders.

I can't believe I work with such whiny dumbasses, no wonder GOOG and YHOO are getting all the talent these days.

Hey Mini, have you ever considered the fact that people will always overestimate their own performance? Even line managers and their managers! Gasp!

This means you can't get rid of the curve, or every manager will be handing out 4.0s like candy. You can't trust their managers to shape a different curve for each team based on performance, because no manager wants to be in charge of a poorly performing unit.

Yeah, people get screwed by the curve. Deal with it, life's unfair. But the suggestions you're coming out with are insane. Please grow a brain.

"However, I know I have exactly -zero- influence on anything that high up the chain. The best I can do is try to do the right thing in my sphere of influence. The rest is up to the shareholders."

Disagree. You can influence it by keeping the debate focused clearly on the main strategic problem rather than on important but peripheral issues. Employees and shareholders need to stand together and send one message loud and clear: pay for performance is fine, but it needs to be enforced consistently from bottom to top. Likewise, the penalties for non-performance, especially at the top, need to be severe - not merely getting 1M shares vs 2M. This is a mgt team that collectively has delivered a 2% (total) return on the stock in THREE years during which time the broader market is up 50%. That is simply ABYSMAL performance by any measure and imo, these jokers should either have been fired (especially when in many cases the underperformance can be linked to specific execution errors) or at a minimum, given no grants/options or at least nothing better than the 2% growth performance that they achieved. Instead, at the top, MSFT execs are on the pay for non-performance plan. Gotta love it - unless of course you're an employee trying to make ends meet and/or a shareholder and/or a customer. Maybe the bell-curve of the ranking system should be applied to their compensation only using the S&P or the NAS 100 (their peers) as the weighting? Against that backdrop, what would a FORTY-EIGHT percent underperformance over THREE years get you? A 3.0? A 2.5? Oh right...fired.

Why has no one from CNET written an article about this blog? Gretchen's (recruiting goddess) blog gets lavish praise because she exposed Microsoft's internal strain. This is a blog that all shareholders should be reading. Who will tell the people?

I’m VERY glad to see that my comments seemed to fire things up a bit… and I LOVE the fact that someone pointed out my earlier claim, I’m a moron. I indeed typed the wrong word… a problem with spell check. Those folks in Word grammar can’t be commended enough for what they do. Fascinating stuff… I can’t begin to comprehend how they go about that work.

Its funny though… so much of what MS does shortly after release becomes… expected… the norm… all about raising the bar. We do it… okay the hard working folks that pull the weight and release features… do it DARN well.

I noticed that someone was wise enough (a manager) to look up my career path and post my promotion rate.  Yep, I was at one level for 36 months… and yes I even submitted myself a 3.0 during my second year. I was told you shouldn’t expect anything higher the first. I was also told that my reviews were written to be “too humble” and that I didn’t “showcase” my work enough in my review for someone to “fight for it.” I’m cool with that… if my manger doesn’t have the time during 11 months to figure out what I’m doing ads value… I don’t expect a term paper I crank out in 2 days that justifies my existence will do the job either. It shouldn’t have to.

To be completely honest… I’m am completely okay with that… I LOVE MY JOB. I work as mentioned with the smartest people I’ve ever come in contact with and that in itself is a benefit I can’t put a value on. Yes, back stabbing and bureaucracy is a way of life… Yes others will always take credit for your work… Yes you aren’t going to get far without putting some things on the line… but also… YES, you can work honestly and sleep at night knowing you did a fantastic job for one of the finest software companies the world has ever know at Microsoft. Great people don’t concern themselves with credit. I don’t concern myself with credit… problem is… I’m not great either.

MS has its problems… but what company doesn’t. To this blogger I won’t back down from my comments that the persons anonymous status likely means they are afraid of the hard work of change and not likely more than a whiner as some have proposed. Please refrain from explaining to me that I’m trying to shut MINI up… I’m not.

Point of view is this bloggers prerogative. I have no problem posting my name here. I did it before and I will do it again. On the 6th day of my employment I wrote an email to the top exec and got a response in 8 minutes… it was… constructive… and we can leave it at that… to be honest I got my hind side handed to me and it was justified. It did prove to me that the core of the company is intact. I can walk into anyone’s office and tell them what I think at any time. The HR folks told me that early on and it was awesome to see it in action.

In response to if I believe that keeping to the family name means stack ranking your kids… well that is comical at best. I do believe that on some level we would be better off if folks were measured as a team for some portion of work. Far too often I see self motivated efforts that are driven by only the owners ambition rewarded goal… and the others that worked (72 hours in the past 4 days) looked over… but that’s how life works.

At the end of the day, it’s a great company… doing fantastic things… with fantastic people… I’ll get another 3.0 and people will want me out of this company… but I’m okay with that. I know what I do… I work tons of hours, put in tons of work and I see the benefit of my work in so many products and projects. I know my feedback will actually change how windows update works going forward… is/was that part of my job… heck no, but I work in a place where I can have that kind of impact if I choose.

I know that my mom’s PC will work better because I work here and provide input on products. I make a lot of moms PC’s work better by providing my input. The axe may fall and I may get canned soon… but I know that what I have done here matters… what I have done will help people… and that is all I care about.

I know that when that axe falls and that type of work isn’t valued… well… it will be a perfect opportunity for me to go somewhere that does value that. In the end… it all works out as it should. My review… I don’t frankly care that much about… my work? I LOVE and will do it as I did it before I worked for this company… because I love it and because I can make a difference. Stack ranking? Well… that is for the folks that have time to worry about those types of things… and quite frankly they are in the sandbox they built.

I love this company… now show me a Linux box that can figure out why I don’t have my USB device plugged into the toaster at Wednesday before 10:00 PM and I’ll show you the next great PC. Until that day happens… MS will continue to make devices people want/need… it’s just that simple.

We all, CAN make a difference here if we choose.

Don’t make my mistake and start to honestly believe what the mini’s have to say is reality… go help your team become what it can be. Make it something it was meant to be… make your mom happy… make your friends happy… make a difference! Make people realize that software really can give them what they want… time and freedom… or at least give some of it back to them. I doubt Longhorn will make the dog stop peeing on the living room carpet… but heck… lets look into it.

AKORB

PS. I have no excuse for what I missed or misspelled in this one… it wasn’t word that is to blame… it was P.U.R.E. A previously undiscovered recruiting error.

"To this blogger I won’t back down from my comments that the persons anonymous status likely means they are afraid of the hard work of change and not likely more than a whiner as some have proposed. Please refrain from explaining to me that I’m trying to shut MINI up… I’m not."

So accusing him of being lazy and a whiner simply because of his blog is meant to do what - encourage him? Too funny. IMO, fwiw, Mini cares about the company as much as anyone and probably more so than most or else he wouldn't have bothered taking this step. The fact that so many criticize him for that and like yourself, even attack his character because of it, likely says a lot more about how on-point many of his posts are and how uncomfortable that makes many of you feel. My advice: deal with the message - not the messenger. BTW, could we get the abridged version next time?

I love this company… now show me a Linux box that can figure out why I don’t have my USB device plugged into the toaster at Wednesday before 10:00 PM and I’ll show you the next great PC. Until that day happens… MS will continue to make devices people want/need… it’s just that simple.

I was at Microsoft for about eight years. The last five of those years my manager and I had an understanding. We basically didn't do performance reviews - I submitted a minimal doc on http://eval and he never bothered to write up his half. I always got good scores (3.75 lifetime avg) and my level was upped regularly.

This was fine with me, but the hard part really was the fact that I never got any feedback on why my level was being changed, or what I was doing right or what might have gone better. Even for people who get some written feedback though, I hear all the time that it isn't *useful* feedback.

My other negative experience with the review system was one of the directs I inherited in a new position needed to be fired. He was a dev and had moved from test and just did NOT write quality computer programs. Turns out it is impossible to fire someone at Microsoft even after giving them repeated 3.0s. All the management do-nothings up the chain just said, gee, well work with him to improve. That's all - it's your problem, we don't want the hassle.

The above poster is right, it is impossible to fire people. I once inherited an SDET who was completely useless, and it took a year and a half of documenting his laziness and stupidity before my manager and I could get HR to move and actually show him the door.

HR is absolutely no help and would rather keep the dead wood around than risk a lawsuit. While their former director was busy banging recruiters, our generalist was no help at all. If they would have just taken this guy and left him in an office out of their budget, that at least would have been fair, but we got screwed royally, and nowhere near like Ken's recruiter bimbos.

"Oh, please -- like people banging underlings universally gets you fired. Some get fired, some even get promoted."

It's a tough one. On the one hand, they've broken an unwritten corporate rule. On the other, they've shown an ability to fuck people over which is clearly a highly desired skill for senior management. To be safe, he should have just fucked over shareholders - that'll never get you canned at MSFT.

Someone else had already pointed the new coworker at hrweb. Since when is pointing the new person directly at the useful information that will help get things done faster the Microsoft way? Let 'em figure it out.

Today Microsoft sucks because it has lost the dynamic nature that is a part of its culture when it was a young and small company. It was much better when it was a developer oriented company. With so many program managers and testers creating a pain in the ass for developers it is no longer a fun place to work.

My theory (just a theory) why MS might be everything people said above (“slow, political, backstabbing, low morale”, etc.) is – to some extent, because of the middle management culture. Let me clarify why: 1) By middle mgt I mean leads up to managers, possible GMs. 2) They form a system/an organism in which the only purpose is self-preservation. They don’t acknowledge any of the aforementioned problems for the simple reason that if they do, they have to move and do something about – in other words, face the problems and meaningfully act on them. It’s like a living organism, they protect each other via politics, deflect the problems and as Jack Welch said once in an interview “…kiss up…” – the information they pass up is: everything is perfect, on time, on budget, awesome quality and everybody is happy – customers love it. OF COURSE WE DO A LOT OF THINGS RIGHT, but we are talking about the problems here. They work the system so that everything is “cool”. 3) Some try to make everything they do look much more important and essential – it is like a big bureaucracy (the result of some meetings is – let’s have another meeting…), as a consequence a void of leadership and decision making is created on the trenches. 4) Anyone that raises issues is labeled as disgruntled/bad/naysayer/etc and since is a threat to the stability of the middle mgt system is usually put in the freezer. I know of case in which someone said that the quality was bad, raised the issue and got shafted in the next review because “complained too much”. In other words, the king is naked but don’t tell him. The saddest thing is that everyone learns the lesson: if you see something wrong and you are not the BOL, fake you did not see it and always say that everything is good. 5) It *seems* that there is very little management accountability. If an individual contributor messes up, surely she/he will see that reflect very clearly in the next review, but it seems that when it comes to mgt MS is much more lenient. My point is – if they can’t/don’t aggregate value to the product, they *must* at least aggregate value to the process by making the “wheels” of the machine work better. I am not advocating that we should be lenient with individual contributors (lowering the bar), on the contrary, raise the bar and be more diligent in enforcing managers do their job well and held them accountable as everyone else. It is so easy for mgt to blame the bad news on a so called unhappy employees (that’s actually the most used line) by using the usual/predictable management PR, but we all miss the point – that is just plain old denial, if one does want to face the problems, then everything is perfect. 7) Lack of transparency (self-explanatory).

I'm not a big fan of relying purely on an objective criteria, because often times weaker people use it as a crutch.

Weaker people use objective criteria as a crutch? Are you cracked?

Imagine someone like you teaching a college mathematics course --"You got 98% on the final exam but I do not believe you deserve to pass. I am basing my decision on subjective criteria left up to my sole interpretation. See you next year!".

Deceptive corporate psychopaths use subjective criteria to get away with wreaking chaos on an organization.

About stack ranking - it's a tough system, but it works. Saying that I'll provide some reference - I've been ranked at the top and I've been ranked lower too. My comments here use MS-speak to make the point. The review process is ambiguous - but one of the marks of a good MS employee is dealing with that. Living with the status quo - an IC needs to drive their own performance, they need to pin their managers down and get the answers they need to be able reap the rewards. If an IC feels that they get shafted in the stack rank, then it's 90% their own fault. Working within the current system is doable. A person needs to ask hard questions throughout the year and constantly calibrate with their peers through their managers. Get out of your office and talk to other people on the team to find out why they succeed and/or fail. Be better than that. If you just sit in your office, work hard but never talk to anyone then you will get what they give you in the stack rank. It's your career and your review score - a person has to take an active role and drive for the results THEY WANT. It takes a little bit of managing up as well as pure performance to not be disappointed by the result of a review. Taking a passive role will guarantee an average review. This is not to say that the system is perfect, it's far from that, but there are no perfect systems - they are still designed by people in the end and we all know how people rate in the perfection department.

Read thru this and have to add a couple comments on my experiences at my former employer (MS) wrt stack rankings.

Episode 1.) I had a couple of top performing CSG's that I couldn't get hired thru the WFP fiasco no matter what. They were eventually hired by other groups outside Windows where their experience and work ethic was valued and rapidly rewarded. In the Windows group, I was told that had they been hired, they would have been viewed as a mistaken hire. In the resultant groups they were heroes. Here's the ironic rub, they are both back in Windows and they are both now viewed as heros.

Episode 2.) In another group within Windows I inheirited a group of low energy non-performers, one of which was definitely a P.U.R.E. I had the distasteful task of rewarding one of these clowns with a 4.0, mainly because he was a great suckass to a couple of upper level mgmt. types. They thought he was a hero, hence he was THE hero for that review period. No pressure, just a mandate.

Episode 2a). The aforemention P.U.R.E was hired into a salaried position by his previous manager "in order to contain OT costs that always result in the position to be filled". This person was a nice guy, just completely incompetant. No way for me to easily get rid of him, I had to "grow" this individual. In order to do this however, the recipient of such efforts must a) be willing to improve and b) be capable of improving. He was neither.

Episode 3). Why would you want to work for a strong group? That's where the greatest opportunity to learn exists, that's where the interesting work is being done, that's what pushes you as a individual to excel! And for that priveledge, you get the shit kicked out of you at review time.

Episode 4). I watched one guy apply for an entry level CSG position in Windows, not even remotely qualified. He gets on at pre MS Visio, hangs in, ends up FT, then MS buys Visio and brings him in two levels above the person who interviewed him in Windows initially. Same person, no real skills, well compensated! Funny stuff!

My point you ask? Here how you play the game You want the cabbage, you have 3 options; a) work for a mgr who will sell you to upper mgmt as a hero b) go to work for a group of lamebrains and be the eagle amongst turkeys (just be careful, a group of turkeys w/ shotgun can still shoot your ass out of the air) or c) come up with the next great version of the memory manager or garbage collector and have DaveC sign off on it.

There has to be some form of reward and grading system, but what was there during my tenure was badly busted. From what I hear from friends still there, it hasn't changed much it's still completely demotivating. Do enough for the 3.5, it's safe.

I am contiually baffled at the folks who believe that forced ranking is a necessary evil. WHY? Give me one good reason why it's necessary at all. Since when is it impossible to pick out the low performers without a ranking? This is a cop-out by people who are too lazy to set realistic goals by which to compare an employee's performance.

I work at a worldwide corporation with more employees in the US alone than MS has total, and we get along just fine without ranking. So none of this, "in a company this big..." crap. You set a compensation pool and then scale raises based on how many ranked at each level. In the meantime, it's very clear come review time who has met their goals.

To take it one step further, the categories for the goals are handed out at a corporate level and cascaded through the various groups. So way upper management in Engineering will tailor goals for engineers and as they work their way down through the various groups the goals get more specific (and relevant) to the people they apply to. So as an engineer, my Financial goal might have to do with cost-reducing a product vs. the Financial goal of someone in sales being something to do with sales numbers. My supervisor sits down with everyone on the team (one on one) at the beginning of the year to set goals and in the middle of the year to review their status. There is no question as to what is being expected of you because *you* wrote the document!

Management through grunt are reviewed this way. The only catch is that to get the very highest ranking, your supervisor or manager has to convince other managers that you really are something special.

Clarification: When I say "how many are ranked at what level", this is a score that has to do with how you met your goals, and is completely independant of other employees. So yes, it's a 'ranking' in the sense you are put in a bucket, but it has nothing to do with anybody else's score.

Yes, it can be abused by lazy supervisors/ managers. But at least it doesn't (by default) punish folks for doing what they were told to do.

Clarification: When I say "how many are ranked at what level", this is a score that has to do with how you met your goals, and is completely independant of other employees. So yes, it's a 'ranking' in the sense you are put in a bucket, but it has nothing to do with anybody else's score.

Yes, it can be abused by lazy supervisors/ managers. But at least it doesn't (by default) punish folks for doing what they were told to do.

Oh, how some things never change in the corporate environment. I am not a Microsoft employee, but I am quite familiar with the pathologies of large technology companies from a long stay at HP.

My example of at HP was if HP was to hire a physics department composed of the 10 brightest physicists in the world, their use of a statistical salary curve to determine pay insures that 80-90% will be underpaid versus their peers over time. Over time, this will result in a mediocre workforce as more and more high performers leave because of better opportunites (read Google).

A forced ranking system pretends that somehow the performance of all of these employees are in statistical agreement with a salary survey used by your HR department based on data given to it by other HR departments. (Why this exchange of salary data between companies is not a violation of antitrust laws is puzzling, as it is at its face anticompetitive in nature).

This occurs when statistically ignorant folk use statistical distributions as a way to characterize people that are by definition, 'outliers', and then somehow want to determine their pay based on statisical measures against the industry as a whole.

Add to this that there are a lot of jobs that fall in the catagory of 'housework' jobs. A housework job is one that is essential to the success of the enterprise, but the value of which are typically not recognized unless they are not happening. How do you fairly compensate these individuals?

Basicly, you can't have it both ways. IMHO, companies would be better off establishing employment contracts with people in these situations, with clearly defined goals and rewards that using any statistical system to distribute awards. This is what happens when the bean counters and HR take over the company and try to 'make a contribution' by killing the much more highly mpensated 'golden geese' who they are envious of at some level.

Thanks for this blog. You can tell by the sheer response of comments that you hit a nerve, a common thread. I've worked at MS for 12 years, in management and as an "individual contributor" and I can tell you, the reward process is broken. As a manager, you're not even allowed to give verbal praise to the people who are going to be the bottom of your curve. A lot of this has evolved from lawsuits against the company for shoddily-handled job layoffs, called "RIF" or reduction in force, and firings.

The end result from all these variables at the same time - low stock price, weird reward system, confusing and ambiguous directions from execs on down, limited resources and ability to get your teams what they need to work, this all equals a huge crunch on the middle managers.

And MS is not addressing this problem. The good middle managers are leaving, which will cause a huge impact later as the bad managers chase off the good technical employees.

This isn't whining. This is expressing an opinion, which, thank God, we can do in the United States. Except at MS itself. Expressing these opinions will get you marked as a dissident, a non-team player, and you could be the next RIF.

Just my 2c. I work in Research. Stack ranking shafted me this review time. My manager told to work on a project, that in all reality not going to lead to tech transfer. It was a long-term thing that, if picked up by others, might make their lives easier and have some limited success. It started in Jan and we won't have working code for another few weeks yet as it's broad in scope and there's a steep learning curve. So at review time I had very little to bargain with. On the other hand I was competing against other who had made big tech transfer wins and who were awarded 4.0s as a result. At my review I put this structural disadvantage to my boss. He bullshitted "I admit the scope for performing highly on your project is perhaps lower than that of other projects".

As I result, I got a 3.0, and then I read from some MS manager about how he looks down upon those low-lifes who get 3.0s and how they should be kicked out, and I am less than impressed. If I was on a project that suited my skills and experience (I'm not), or my aspirations (I was allocated on to another team because of resource shortages, and am not working in the area I was hired to work in or want to work in), then my motivation would be non-zero and my performance would improve. If Mr Manager is seeing lots of 3.0s, perhaps then this is an indication of his competency (or otherwise) as a motivator and planner. For the record, my boss is one of the worst I've ever had in any job. I've never seen someone who cares so little about his staff, trades solely on his eminence, and takes so little responsibility for what goes on under his auspice. Under those sort of conditions, Stack Ranking means I barely stand a chance.

As studied in my statistics 101 class:A-Probability distributions are useful for analyzing large population samples. What applies to large samples does not necessarily scale down to smaller samples within the same population.B-It is a fallacy that many or all probability distributions are "normal" (a.k.a. Gaussian distribution, a.k.a. Bell-curve distribution)C-When results fall outside the expected distribution it is necessary to investigate them

Applying distribution fitting properly would not be that complicated:1-Let managers rank according to established criteria (e.g., competencies deck) without curve limitations2-Look at the resulting distribution on large population samples (e.g., at the Division level)3-Find unusual results that do not match the expected distribution and investigate the reasons4-Match the distribution to the rewards that business conditions allow.

I'm still not totally convinced that stack ranking is a miserable failure. I think it works fairly well, just as the SATs work fairly well. Not a perfect solution, but when you're dealing with such a large number of people . . . it works pretty well for most cases. There will always be outliers.

I think this thought should be taken to its logical conclusion -- a place where most of the other ideas here also lead:

Microsoft needs to be split. Into entirely separate companies. Three or four at least. Among other benefits - including streamlined product development and better security - it would have the effect of shedding a hefty portion of interconnecting mid-level management detritus. An amoeba can only get so big before it either splits, or starves. Right now Microsoft is starving.

I have worked for Microsoft for 7 years, and yes when I came here I did "bleed blue". For so many years I drank the Kool-Aid....and now I find myself choking on it. It continues to amaze me that the poorest performers are given the highest review scores, instead of being held responsible to contribute value to the team and the company. The last review process simply amazed me. I achieved 120% of my quota attainment, was given a 3.0 as well as a lateral role in a different part of the organization. After the smoke cleared,all I could say was...HUH? It pains me that the compensation and review plan is so unfair that you can significantly exceed your number, displace the competition, and recieve a meager bonus,and a 3.0!! Not to mention seeing the new guy who has been with the company 6 months, with no knowledge of the customer or the job who did not come close to making quota is given a 4.0? I have seen such an exodus of highly inteligent and skilled professionals leave Microsoft. Perhaps this is part of the master plan, manage out the employees with 65-68 levels and replace them with lower level, lower paying salaries that will chant the "RAH! RAH! RAH!" when Ballmer runs up and down the aisles at annual global briefing.

As a 5 year three team employee of Microsoft, I have to agree with mini. The review system is and has been broken since before I left in 2002. I worked in a team where we were responsible for 100s of machines (lab rat is an OFFENSIVE term) and some of us were really incompetent but were considered "acceptable" because they did not "rock the boat."I was consistently improving lab areas with automation and efficient environments, but was never applauded.What sense does it make to write your own review if your manager can say he doesn't agree and pass you over for promotion and bonuses?Also, how can you rate an individual who only owns three machines the same as one who owns 200?

That was a major reason for me leaving. Though if the weather wasn't so bad it would be easier to stay motivated.

Middle management incompetence is another major reason. I had managers whose only real skill was drinking at the WIMs. There has to be some correlation between bad management and late releases with bad quality.STEs and SDETs who criticize MaMaM or the lack of quantifiable goals is immediately put on the "hit list." The person is then forced to the bottom of the curve no matter how effective they are and they have no choices but to suffer in dreary rainy silence or jump ship.

"It was much better when it was a developer oriented company. With so many program managers and testers creating a pain in the ass for developers it is no longer a fun place to work."

LOL this is laughable. The developer-as-god syndrome is part of what's WRONG with Microsoft. I'd say 90% of the devs I worked with in my 13 year tenure at MS were self important pompous jerks. They couldn't design software users actually WANT if it hit them on the head in shrink-wrapped form.

On the subject of the 'curve' and stack ranking, I have first hand experience from my time as a manager in Microsoft.

When I became a manager in Microsoft back in '94 the company was a lot smaller and in management meetings we openly talked about matching the curve and stack ranking. Both were seen as positive and HR helped all managers through this process. The curve was important but we truly didn't focus on it as the belief was that by the very nature of performance reviews and different people some people would perform better than others and when viewed mathematically the bell curve would be achieved. I had a small team and I wasn’t worried because again it was clear that for the curve to 'work' there was a critical mass of people required and therefore I was under no pressure to rate one employee higher than another purely to hit a curve. My team was rolled up into my group until there was a critical mass to make the curve statistically relevant.

Later in my time at Microsoft, around '01 I was still a manager but had seen the company grow hugely. This growth brought in many experienced managers from other companies and the HR pool was diluted. Coupled with the almost paranoia in the US around equal rights for minorities the curve took on a different identity. I witnessed a dilution in the quality of first and second line managers within the company and this lower talent and lack of experience meant that the wrong message was given and the curve was used in the wrong way.

I was very fortunate to see it both work and not work and I know which I prefer and which gives the best motivation to employees and since leaving Microsoft I have used that experience.

(I was based in the UK and worked locally in the UK, in EMEA and globally)

"The knee-jerk response will be to say that it's only the 3.0's who are complaining about this system."

It's not only the 3.0s but also some of the 3.5s who are not happy. There are people on my team who are ready for a promotion for more than a year but are told that they are close and handed a 3.5 instead of a 4.0.

I was a Lead at Microsoft and had a staff of about 1/2 dozen or so reports and therefore was both sides of the stack rank.

I also deployed the stack rank especially because I was a lead on some cutting edge technology at Microsoft and everyone on the team were solid developers and sdets.

In such an environment the delinations are minute yet in order to maintain the curve some folks had to be displaced in order for the money to be divided in accordance to upper management desires.

What astonished me was the naivet'e of the other leads who would evaluate their reports on the flimiest of errors using that to lower their rank. Because I understood the process and myself having suffered not just the fate of bad reviews but also the fate of not getting any pay increase for my efforts, I ALWAYS ranked my reports at the upper level of the rank.

The stack rank is nothing more than a bidding war for rank position that has a PROFOUND effect on an individual's livlihood. My job as lead was to ALWAYS prepare my reports for the stack rank rather than prepare them for their careers at Microsoft.

Being a lead under those condition became very stressful to the point where I decided to leave the company. One of the reason I left was that my manager denied my transfer.

I got sick and tired of dealing with the banalities of the system that I decided quit Microsoft and become a contractor instead. And I glad I did.

As a contractor I've gotten more developement opportunities than I ever got at Microsoft and learn more about design and architecture and have gotten more opportunity to utilize those skills -- and more pay to boot.

Clearly Microsoft needs to change their internal process but because they've been "successful" with their process (up to now) it will be very difficult to dissuade them to dislodge this process.

Each one of those SDE positions had been hand picked and I knew that failure was not an option for any of my guys.

I just couldn't bring myself to stick the poor suckers on the curve. As far as I was concerned they were all great! Sure each and every one of them I could be critical of but there was nothing huge. Everyone debugged their own code, came up with ideas independently, championed those ideas and took risks to make sure the customer got what they deserved.

My solution - I made my team pick straws to see who got low med and high on the curve.

I was a Lead at Microsoft and had a staff of about 1/2 dozen or so reports and therefore was both sides of the stack rank.

I also deployed the stack rank especially because I was a lead on some cutting edge technology at Microsoft and everyone on the team were solid developers and sdets.

In such an environment the delinations are minute yet in order to maintain the curve some folks had to be displaced in order for the money to be divided in accordance to upper management desires.

What astonished me was the naivet'e of the other leads who would evaluate their reports on the flimiest of errors using that to lower their rank. Because I understood the process and myself having suffered not just the fate of bad reviews but also the fate of not getting any pay increase for my efforts, I ALWAYS ranked my reports at the upper level of the rank.

The stack rank is nothing more than a bidding war for rank position that has a PROFOUND effect on an individual's morale and livlihood. My job as lead was to ALWAYS prepare my reports for the stack rank rather than prepare them for their careers as developers.

Being a lead under those condition became very stressful to the point where I decided to leave the company. One of the reasons I quit was that my manager denied my transfer. I got so sick and tired of dealing with the banalities of the system that I've become a software contractor instead. And I glad I did.

As a contractor I've gotten more developement opportunities than I ever got at Microsoft and learned more about design and architecture and have gotten more opportunity to utilize those skills with more pay to boot.

Clearly Microsoft needs to change their internal process but because they've been "successful" with their process (up to now) it will be very difficult to dissuade them to dislodge this process.

If I believed that my opinions mattered to those above me, I'd float the following suggestion up the chain. I don't believe that however, so this is as far as I'll go with it:

Bill and Steve: Consider taking your Partner level or higher employees (no more than three working together) and asking them to start companies. If they sell a concept to you, Microsoft Angels the company for a year. Written into the charter for the Angel funding agreement is that within a year of any IPO, Microsoft will own no more than 25% of the company. These Partners would be given free opportunity to recruit from the MS Ranks. Anyone convinced to join the Partners in question, as well as the Partners themselves would no longer be Microsoft employees. However, the quality people would, in the case of a failed MS-sponsored startup, almost certainly regain employment at MS [of course, being external, they'd have to go through interviews, etc. - just like any other candidate]. From the Partners perspective, they'd have to go convince people to work for them.

What's the point?

- You have no motivation among most your workers today to put in long hours and really bleed for the company today. Paying in the 65 percentile only works when the stock soars. It hasn't for 6 or 7 years. TRUE incentive works.

- The coveted Partners, who help determine the course of Microsoft today, could prove their worth, pad their egos, and potentially be rewarded by the market many times their current bloated compensation. [Besides, if these people are truly visionaries, they won't have any problem coming up with brilliant, market-shaking ideas, right? I mean, that IS why they're rewarded so heavily.]

- The perception of Microsoft as something that can no longer grow may lessen. 25% ownership is enough to leave the majority to the market, but still enough to benefit from the markets habit of excitement from 'untapped potential'.

- The bulls*** stops. Believe me, when those partners and the people they've hired know that there's $X in the bank and they've got to deliver in N months, and "slip" isn't an option, people become remarkably less political and bond toward a common goal. Nobody talks about 'stack ranking'. People talk about shipping NOW, because they're not 100% sure whether the company can cover paychecks for three more months.

And you know something? You end up with small companies, struggling to succeed, with people truly giving it their all, and indirectly or directly, you benefit from it. What? This is akin to making Microsoft similar to an Venture Capital company?? Fair argument. However, it doesn't mean MS stops doing anything it's already doing or wants to do in the future. Besides, Microsoft funds mostly charity organizations today. Beyond Windows, Office, and (I believe) MSN, every other part of the company loses money. LOTS of it. Thousands, possibly millions of times more than I'm talking about here. If you can't name MS products that make no sense, and just burn money quarter after quarter (always with the breakaway plan just around the corner), you're not paying attention.

Now that I've advocated it, allow me to explain why I fear it wouldn't work (apart from what I've already mentioned). Though the term 'startup' is frequently used in MS halls, it's almost always used by people who've never worked for anyone outside of Microsoft. These same people seem to think they know all about startups when they actually know nothing of them. Very few of the MS Partners I've met would have the slightest clue how to start a company and make it succeed. Success at MS today has become an exercise in corporate politics. Those skills, perfected by many of the partners I've met, aren't worth crap in making a startup company work. Finally, employees would be difficult to convince to give up the high-quality MS insurance and their Pro Club memberships to take a chance at something, especially working for partners who the PMs, Testers, and Devs have never seen doing anything but playing the political game I mentioned earlier.

I hope I have misread many people, even if this is a harebrained scheme to try to restore incentive in a company whose stock will never rise significantly again.

I was a very happy and very motivated Microsoft employee until my last review. My previous two review scores were both 3.5. For my last review period, I had worked harder than ever and was hoping to get a 4.0. Well, 4.0 is somewhat subjective, so I had to get atleast a 3.5. To give me a 3.0, one had to be completely out of his/her mind. Aparantly, in the last month of our review period, three 3.0 performers left my group and my manager ended up giving me a 3.0 !?@$@!@#^%&%??. I had changed my group that year and was newer than most other people. For the entire review period, my manager had been telling me that I was doing a great job, expect the day when he was delivering me the review when he suddenly realized some areas of weakness in me!! With any feedback, the points he mentioned were something I could have easily changed about myself in a matter of days if not hours. Well, my manager would rather screw me than the other old-timers. Now my motivation is completely gone. I am still at Microsoft just to clean up my review score. I have no choice but to leave Microsoft after that.

Nobody outside of Microsoft gives a flying f what 'Microsoft Review Score' you last got was. The never-worked-anywhere-else people seem to forget that when you interview elsewhere, they don't get to read all your past reviews, look at your review scores, etc. They have to decide to hire you or not (and what to offer you) based on what they feel you're worth.

The only advantage in cleaning up your score is if you want to return to MS someday.

Don't feel like you're alone. The subjective use of reviews is all part of the 'game'. Any reviewer can interpret your core compentencies rigidly or loosely and make you appear fantastic or miserable. This ridiculous subjectiveness to the reviews, hidden behind a veil of objectiveness (intended to thwart lawsuits), is a key reason so many people are angry.

If you're staying for the time being, realize that your hard work doesn't necessarily equate to a good review score. How your manager feels about you does. Want a better score? Do what so many do: Don't think about working hard, or doing 'the right thing'. Work on just making your manager look good to his boss. Do that, and a great score is more likely to head your way than a year of 60 hour weeks.

I think a big problem is that the stack ranking really encourages a culture of emphasizing visibility over performance.

Your coworkers know what work you really do. If he's good, your manager knows what work you really do (though some are sadly easy to fool.) But managers on other teams almost certainly have no idea what work you really do -- they only know what they've seen. And what they see usually depends not on the work you do, but on how hard you try to make that work visible.

Unfortunately, the most visible work is not always -- or even not usually -- the most useful work. This results in bad resource allocation; it's something I've written about at my blog.

Talk about a frat system. I have a rogue manager in my group who is very good at telling jokes but he is incompetent as a manager. I have reported this more than once up the chain and nothing has been done about it.

For example:How confidential are reviews? The last slimy rogue manager I had posted reviews he reviewed for the last 4 years on a public server. He said he was too lazy to leave them on the hrsite while he rebuilt his server. When I told uppper mgt nothing happened except the reviews were removed.

I feel injured by my lost of confidentiality on my reviewes. I'm in the middle of applying for another job internally to get away from this manager. He's said racist crap to me and kept his back turned while I talk to him. There is no end to the things this guy has done. I suppose being a manger a floor guy at computer city though gives you great qualification for management at MS. I'm not one to go to HR but I have gone to his immedite manager.He had been granting his worthless buddy who cant code 4.0s for bogus reasons. As soon a s new mgt steps in the real deal is found out and the 4.0 guy who got turned into a mini manager gets demoted.

As soon as I started under this guy my performance was fine I immediately flatlined at 3.0 and he put the things I did on others reviews. I was told I had no option but to sign.

Recently found out he promoted someone (because he cant keep his mouth shut) again in midyears that does not deserve promotion.

Upper management is defending the guy. They do not even realize he is going after immediate upper management again in an effort to move up the chain.

The last bogus promote was the final straw for me, I'm leaving the group (theres ahem level issue (no surprise) but I have many external parties interested) I have to make sure something is done about this guy. Think I should contact HR...?

Disclaimer

These are sole individual personal points-of-view and the posts and comments by the participants in no way represent the official point-of-view of Microsoft or any other organization. This is a discussion to foster debate and by no means an enactment of policy-violation. These posts are provided "as-is" with no warranties and confer no rights. So chill. And think.